Jackson Diehl's Oct. 4 report {''Israel: Settlements Policy Unchanged''} highlights our country's continuing Middle East double standard.

Mr. Diehl reports that the additional $400 million in ''emergency aid'' to Israel will indeed be used to subsidize the continuing Israeli settlements of the West Bank and Gaza and that many of the Israeli settlements ''have ambitious plans for expansion in the coming years.'' And it goes without saying that Israelis will still be able to buy houses and rent apartments in these settlements at only a fraction of the cost of identical houses and apartments inside Israel.

This news comes after a pledge Secretary of State Baker recently received from the Israeli administration ''that immigrants will not be settled {in the occupied territories}.'' The pledge came from the same Israeli administration that insists pressure from the United States will never persuade it to change its existing policies and that Israel remains committed to maintaining control of the occupied Palestinian territories at all cost.

Imagine how absurd it would be for Iraq to request emergency aid from the United States (maybe to house returning prisoners of war recently released by Iran) while it continues occupying Kuwait. It would be ridiculous for the State Department to give aid to the same Iraqi government based on vague assurances that those funds would not be spent to support Iraqi settlement of occupied Kuwait. But if you substitute the hard-line Israeli administration and the Israeli-occupied territories into the same scenario, that is exactly what our government has just done.

We have given $400 million to an Israeli administration intent on settling and occupying the Palestinian territories and denying Palestinian human and national rights based on a vague ''pledge'' that those funds would not be used in the West Bank and Gaza. It's no surprise the Israeli Likud government is alreadying saying ''What pledge?''

PETER NOURSI Silver Spring